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By Andy Harris • November 26, 2018

5 Signs You Need a Real ERP System

Small businesses, especially startups, often run their operations with a hodgepodge of software systems. There’s the accounting system, the HR software, the inventory database, the online store dashboard (or several online dashboards if selling on multiple platforms), various spreadsheets, and other IT systems that collectively manage and manipulate company data.

These systems collectively run the business, and they serve many of the basic functions of enterprise resource planning software (ERP). The problem is that they aren’t ERP, they are a mishmash of disparate systems that at best only partially work together. And this comes at a great cost for a business.

How do you know that your current system is costing you, and that it is time for a real ERP solution? Here are five signs.

  1. Limited Visibility

Running a business efficiently requires insight into how each part of the company is performing, and how each part relates to the other parts. For this insight, you need visibility. Ideally real-time visibility.

With a bunch of business systems cobbled together, there isn’t visibility. Instead, there are islands of data cut off from each other and working independently. Accounting only sees accounting. HR only sees HR. Management must pull together data from various sources, and definitely not in real-time.

Real ERP serves as a system of record, bringing together data from all parts of a business into a unified whole. This makes full visibility possible, and from that comes business efficiency.

  1. Inefficiency

A second and related sign that your business needs ERP is inefficient processes.

If your company’s data is spread across multiple business systems, you’re probably spending too much time managing data and trying to see the complete picture. Data is maintained in multiple places, multiple applications must be open at the same time, and your backend IT is a mess even if the data is stored across a number of visually pretty, “easy to use” web services.

ERP makes your business more efficient because there’s only one home for the data, one management process, and greater coordination among the departments in your company.

  1. Increased Risk from Double Entry

One of the biggest points of failure at your company is human error. People make mistakes. Data gets entered wrong, things are left out. If you’re using a jumble of software solutions to manage your business, there’s probably overlap. This increases the likelihood of human error and inconsistent data; when data must be entered or maintained in multiple systems, there’s greater risk for mistakes and confusion.

You know it is time for a real ERP solution if the data in your business systems is unreliable or inconsistent.

Risk is reduced when you use an ERP system because there’s only one home for the data even if it is accessed in different ways. Instead of managing multiple data sources and doubling or tripling the odds of mistake, you have a single nerve center and data that only must be entered once. Less chance for mistake, less mistakes that get made…and greater opportunities for spotting those mistakes that do happen because everyone at your company is using the system and working with the same data (if they have the permissions to access a given piece of data, of course).

  1. Poor Safeguards and System Monitoring

A fourth sign that you need ERP is if there are no guard rails within your business systems.

Are there safeties in place that enforce your company’s business processes, protecting against both negligence and intentional bypass of the processes at your company? If you’re using a hodgepodge of software solutions, the chances are strong that there are not enough of these safeguards in place.

Because your software systems are not integrated, there also probably is not adequate monitoring of system usage and the performance of good businesses processes. Non-compliance of established protocols and rules required by law are hard to monitor and enforce with multiple backend business systems.

With ERP, however, you can both set up process rules that must be followed, and easily monitor the enforcement of these rules.

For businesses in regulated industries, an ERP system is a must for compliance reasons. For firms with more operational freedom, safeguards and monitoring are important from an efficiency standpoint.

  1. Lack of Integration

Finally, you know you need an ERP system if there is a lack of integration among teams, departments and processes.

Silos are bad. No explanation is needed, because we all know that systems and people that don’t talk to each other limit information sharing, improvement and efficiency. Yet many businesses allow their business systems to operate independently of each other, and this bleeds over into teams and departments not coordinating.

As a central repository for all of a company’s data, ERP brings together business processes, teams and departments. Collaboration, coordination and appropriate visibility is much easier when all users are working from the same system, and all processes are drawing from and reporting to the same storehouse of data. Instead of many systems, there is just one hub and many views.

So if you’re experiencing any of these challenges, it is time to stop messing around with a hodgepodge of software systems and start using an ERP solution.

Every Fortune 500 company uses ERP. So should your business, regardless of your size.

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